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Investors have suffered through low money market rates for decades now, but rates of interest in the us and around the world cannot stay low forever. Low interest rates reward borrowers and punish savers which is a combination made to encourage people and businesses to spend money and increase the economy.

Why Money [link widoczny dla zalogowanych] Market [link widoczny dla zalogowanych] Rates Are At Historic Lows

They still remain at historic lows as a result of Federal Reserve. The government Reserve sets what is called the Federal Funds Rate the interest [link widoczny dla zalogowanych] rate that banks charge [link widoczny dla zalogowanych] the other to move money-back [link widoczny dla zalogowanych] and forth in short-term loans. Banks likewise [link widoczny dla zalogowanych] enable them to set the optimum [link widoczny dla zalogowanych] interest rate which other financial products for instance Treasury notes, home mortgage loans, as well as accounts are [link widoczny dla zalogowanych] based [link widoczny dla zalogowanych] off.

When the Federal Reserve raises the Federal Funds Rate, the one interest they control, all the other rates follow. So before the Federal Reserve produces a move, not one other rates including money market rates will rise.

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Banks will again start lending money to increasingly more customers since the economy continues to improve. Using [link widoczny dla zalogowanych] the eventual influx of the dependence on new loans for homes, cars, business, as well as other reasons, banks need money from depositors to lend.

It becomes an example of classic supply and demand. [link widoczny dla zalogowanych] Because banks will need more deposits, they're going to eventually rise as demand increases for loans. Banks won't have the deposits to lend should they do not entice customers to have their take advantage their vaults. This will likely [link widoczny dla zalogowanych] ultimately raise the [link widoczny dla zalogowanych] interest levels that investors earn on money markets and savings accounts.